The Lieutenant-Governor appointed the Township of Castlemaine as a place for holding a Court of Petty Session on the 19th of November 1851 under the 17th section of the Act of the Governor and Council of New South Wales (3 William IV, Act No. 3). Notice was given on the 20th of January 1853 that a site had been fixed for the Township of Castlemaine, and that a Plan of the approved township could be seen at the Surveyor General's Office in Melbourne, or at the Police Office in Castlemaine itself. The first Land Sales of Castlemaine Township land sold under An Act for Regulating the Sale of Waste Lands Belonging to the Crown in the Australian Colonies 1842 (5 & 6 Vict., C36) were held on the 15th of February 1853.
Castlemaine was proclaimed a municipal district in accordance An Act for the Establishment of Municipal Institutions in Victoria 1854 (18 Vic. Act No 15). Under this Act any district within the Colony of Victoria of an area not exceeding nine miles square, and of a population of at least three hundred householders, could become a municipal district. A petition signed by at least one hundred and fifty local residents was to be provided to the Lieutenant Governor, who took advice from the Executive Council before making a decision. The first meeting of the Council was held on the 28th of January 1856.
Castlemaine was constituted as a Borough under the Municipal Institutions Act 1863 (27 Victoria, Act No 184), and was listed in Schedule B of that Act as Municipal District Number 6. The Act enabled all Municipal Districts formulated under previous Acts (and listed in Schedule B) to become Boroughs of the districts, and became effective from the 1st of October 1863. The first Borough Council meeting was held on the 21st of October 1863
The Borough of Castlemaine was declared to be a Town by Order-in-Council dated the 19th of December 1949, to take effect from the 30th of January 1950. This was in accordance with the provisions of the Local Government Act 1946 (Act No. 5203), and to comply with a petition presented to the Executive Council by the Borough of Castlemaine Council.
Castlemaine was declared to be a City in accordance with the provisions of the Local Government Act 1958 (Act No. 6299) by Order-in-Council , to take effect from the 4th of December 1965. Under this Act, any borough having received at least thirty thousand pounds in revenue received from general and extra rates over the previous council year may petition the Governor-in-Council to declare their borough a City.
This council was abolished on 19 January 1995 as part of a statewide program of local government reform enacted between 1993 and 1995. The reform process reduced the number of councils from 210 to 78. The Mount Alexander Shire Council (VA 3711) has been appointed as the successor in law of the City of Castlemaine and has assumed its rights, assets and liabilities.